Petillo: Killing the sacred cow or the golden goose?

Published 5:23 pm, Friday, March 6, 2015

In 2015, expect the General Assembly to continue debating Connecticut's innovative Payment in Lieu of Taxes (PILOT) program, which reimburses municipalities for the potential losses in property tax revenue resulting from the presence of nonprofit colleges and hospitals in their communities.

It is understandable and commendable that our legislators reevaluate various tax and spending initiatives, no matter how sacrosanct they are believed to be, in times of fiscal distress. Periodically reviewing established policy improves accountability and performance, while also ensuring the economic health of our state.

However, policy changes should not be based on short-term financial considerations or without a holistic understanding of the industries in question.

The established success of higher education is built upon generations of hard work and smart decisions, made by both industry professionals and political leaders. Underlying these strong decisions -- whether executed in revolutionary America, when colleges and universities were declared exempt from property taxes, or in Connecticut today, through initiatives such as the PILOT program -- is a fundamental conviction that excellent post-secondary education is a national good that must be protected and allowed to flourish. The nation's decision to uphold this belief time and time again has made higher education in the United States the best in the world.

So at a time when the American public is experiencing a crisis of confidence in our basic institutions, it is imperative that we not inflict damage on ones that perform as intended and are held in high regard.

Traditional universities and colleges, along with the medical system, consistently outperform most other institutions in the level of trust and satisfaction accorded by the public. These are institutions that function effectively -- not only in their stated mission, but also in the context of the PILOT debate -- for the broader positive impacts they have on the communities in which they are located.

When Connecticut's colleges and universities are viewed as long-term investments that count local residents among their shareholders, the return on investment is substantial. In exchange for local property tax exemption, we provide an educated workforce for competing in a global economy, establish new technologies that spur business growth and provide thousands of jobs for the surrounding community. We provide many of the teachers, doctors, nurses, and health-care workers for the future, who are educating your children and caring for families in Connecticut 24 hours a day, 365 days a year.

Some benefits are unquantifiable, such as art exhibits, lectures, theater, music, athletics, community events and literacy clinics, not to mention the thousands of hours of community service provided by students. None of these goods could exist without the concentration of resources and talent enabled by Connecticut's universities; and yet Connecticut's universities likely could not thrive -- or perhaps even exist -- without the tax-exempt model. And many community organizations would be shuttered if they did not have access to student volunteers. In addition, nonprofit colleges and hospitals are economic drivers for our state's cities and towns in unexpected ways, not always captured in PILOT's program budget. For example, Sacred Heart University alone has over 15,755 alumni living in Connecticut who pay more than $1.4 billion in local and state taxes. Additionally, the university is responsible for $141.33 million in sales of goods and services. These are only a few of the common contributions that universities make to our state; each school is uniquely vital to its community academically, culturally, and economically.

Revoking traditional tax-exempt status for colleges and hospitals or dramatically reducing aid to cities and towns by the state today offered through PILOT -- both of which are among the proposed reforms set for debate in 2015 -- will have a twofold effect on the citizens of Connecticut.

First, it will reduce the effectiveness of these institutions. Second, it actually will cost citizens more, as money formerly supplied for student aid or increased care staff is instead directed towards negotiating and paying property taxes. Furthermore, at a time when many parents are struggling to find a way to pay for college, this potential legislation will only increase tuition costs for all. To that end, as a member of the Connecticut Conference of Independent Colleges (CCIC), we have signed on to the #FutureCT campaign to illustrate and educate the public on the value of the state's non-profit institutions and the critical importance of the state's PILOT program. The purpose of the campaign is to remind our citizens and policymakers that the tax-exempt system allows universities like ours to focus on the crucial mission of teaching, research and service to the community. Diverting resources and attention from these tasks will undermine future success for both the universities and the state. Let's not ruin a system that has served us well. To join the campaign, log on and sign up at www.futurect.org.

Quite simply, taxing not-for-profits on their property is unheard of. Connecticut should not be the first to impose a property tax on colleges and hospitals. Such a move will leave these organizations with no choice but to raise prices.